Appraisal myths debunked

By law, an appraiser is required to be state-licensed to offer appraisals for federally-related transactions. You have the ability to request a copy of the completed appraisal report from your lender. Contact our professional staff if you have any questions about the appraisal procedure.

Myth: The value that is ascertained by the appraiser is required to be the same as the market value.

Fact: This is not often the case; most states do support the idea that the assessed value is the same as market value, but not always. Generally when interior remodeling has been done and the assessor is has not investigated the improvement or other homes in the neighborhood have not been reassessed for years or more, it may vary wildly.

Myth: Depending on whether the appraisal is ordered for the buyer or the seller, the cost of the property will vary.

Fact: There is no vested interest on the part of the appraiser in the outcome of the analysis, therefore he will complete his work with impartiality and independence, no matter for whom the appraisal is ordered.

Myth: The replacement value of the property is always is on par with the market value.

Fact: Without any pressure from any external parties to purchase or sell, market value is what a willing buyer would pay an interested seller for a specific house. Replacement value is the dollar amount necessary to rebuild a house in-kind.

Myth: Certain formulae, like the price per square foot of the property, are what appraisers use to arrive at the cost of a property.

Fact: There are many numerous methods that an appraiser will use to make a full investigation of every factor in consideration of the home, such as the size, location, condition, how close it is to specific facilities and the sales price of recently sold comparable houses.

Myth: As homes appreciate by a certain percentage - in a strong economy - the homes nearby are expected to increase by the same amount.

Fact: Cost appreciation of a certain property is always determined on a case-by-case basis, factoring in information on comparable houses and other relevant elements. This is true in strong economic times as well as bad.

Myth: The house's outside is determinate of the actual price of the home; there is no need to do an interior inspection.

Fact: To determine an accurate value beyond all doubt, an appraiser must examine the house on a variety of factors based on area, condition, improvements, amenities, and market trends. An external inspection certainly can't provide all of the information needed.

Myth: Because the consumer is the party who puts up the money to pay for the appraisal report when applying for a loan for any real estate transaction, by law the appraisal is theirs.

Fact: The report is, in fact, legally owned by the lender - unless the lender "relinquishes its interest" in the document. Consumers must be supplied with a version of the document through request because of the Equal Credit Opportunity Act.

Myth: Home buyers need not be concerned with what is in their appraisal report so long as it exceeds the requirements of their lending agency.

Fact: A home buyer should definitely read through their appraisal report; there may be some questions or some concerns with the accuracy of the report that need to be addressed. Remember, this is probably the most expensive and important investment a consumer will ever make. Also, the appraisal makes a near perfect record for future reference, comprised of useful and often-revealing data - including, but not limited to, the legal and physical description of the property, square footage measurements, list of comparable properties in the neighborhood, neighborhood description and a narrative of current real-estate activity and/or market trends in the vicinity.